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Banks may be reluctant to lend money at the moment -- including to each other -- but there's always enough spare change for a pet project, particularly if it's green. Now it seems that emissions offset companies are the latest investment wheeze. Yesterday, venerable investment bank JP Morgan bought Oxford-based offsetting specialist ClimateCare for an undisclosed sum.
ClimateCare is one of the highest profile carbon offsetting companies, offering offsetting to both individuals and businesses. These include The Guardian, British Gas, the Co-operative Bank and British Airways. By August 2007, it had offset one million tonnes of CO2, the equivalent to taking 300,000 cars of the road a year. Most of the schemes it supports are overseas, including wind farms in China, fuel-efficient stoves in Mexico, hand pumps in India and rainforest reforestation in Uganda. Eighty percent of its investment is in renewable energy rather than planting trees.
ClimateCare hopes that its acquisition will see the funds it can invest in offsetting projects increase significantly, as the investment bank can leverage its influence over blue chip customers. When the takeover is complete, ClimateCare will be absorbed into JP Morgan's existing Environment Markets group, which will originate carbon emission reduction projects globally and trade the carbon emission reduction credits generated by the projects in the compliance and voluntary markets.
"[We] can now deliver expertise on a truly global scale, and work with hundreds of major partners around the world to facilitate the roll-out of low-carbon technologies at the scale and pace required to make a genuine difference to our environment," said Mike Mason, founder of ClimateCare.
ClimateCare was set up in 1998 as company limited by guarantee but with no shareholders. It gives a ten per cent royalty on 'sales' to an operating company that administers the trust. In 2006, sales racked up £890,000 and it forecasted a 700 per cent growth in turnover for 2007.
The global £200m voluntary carbon market, which is mostly unregulated, has been under considerable attention recently with critics warning that there are an alarming number of fraudulent schemes. The UK government announced in February that it was introducing a code of conduct for offsetting firms in the hope of ridding the market of cowboys.
But the plans were criticised for only recognising EU and UN-backed schemes and not allowing voluntary carbon credits schemes to carry the kite mark. ClimateCare, which offers both voluntary and EU/UN-recognised credits, is hoping that the code of practice will be extended to incorporate voluntary initiatives.
It is perhaps in ERU/CER credits where JP Morgan hopes to leverage most value, however. Many of its corporate customers will be obliged to cut emissions, offset them or purchase further carbon credits. A one stop shop will be able to offer offsetting and credits to multinationals that have so far been wary of small offset start-ups.
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